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Atlanta AAII Income Investing Subgroup

Atlanta AAII Income Investing Subgroup . Stan and Michael Herndon October 27, 2011. Agenda. Introductions Purpose of the Group Overview of Income Investing Opportunities Open Forum Ideas for future meetings Open discussion. Income Investing Opportunities. Stocks Preferred Stocks

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Atlanta AAII Income Investing Subgroup

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  1. Atlanta AAII Income Investing Subgroup Stan and Michael Herndon October 27, 2011

  2. Agenda • Introductions • Purpose of the Group • Overview of Income Investing Opportunities • Open Forum • Ideas for future meetings • Open discussion

  3. Income Investing Opportunities • Stocks • Preferred Stocks • Income-focused Mutual Funds • Income-focused Exchange Traded Funds (ETFs) • Real Estate Investment Trusts (REITs) • Business Development Companies (BDCs) • Master Limited Partnerships (MLPs)

  4. Stocks • Units of ownership of a public corporation. Owners are typically are entitled to vote on the selection of directors and other important matters as well as to receive dividend on their holdings. In the event that a corporation is liquidated, the claims of secured and unsecured creditors and owners of bonds and preferred stock take precedence over the claims of those who own common stock. For the most part, however, common stock has more potential for appreciation.

  5. Bank, Manufacturing and Utility Stocks All investments listed are merely examples; you should conduct your own research before investing.

  6. Canadian Stocks All investments listed are merely examples; you should conduct your own research before investing.

  7. Preferred Stocks • Class of capital stock that pays dividends at a specified rate and that has preference over common stock in the payment of dividends and the liquidation of assets. Preferred stock does not ordinarily carry voting rights.

  8. Preferred Stocks All investments listed are merely examples; you should conduct your own research before investing.

  9. Income-Focused Mutual Funds • An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund's capital and attempt to produce capital gains and income for the fund's investors. Income-focused mutual funds typically focus on high-dividend paying stocks, use covered call strategies, or invest in bonds.

  10. Income-Focused Mutual Funds All investments listed are merely examples; you should conduct your own research before investing.

  11. Income-Focused Exchange Traded Funds (ETFs) • Exchange Traded Funds (ETFs) offer public investors an undivided interest in a pool of securities and other assets and thus are similar in many ways to traditional mutual funds, except that shares in an ETF can be bought and sold throughout the day like stocks on a securities exchange through a broker-dealer.

  12. Income-Focused Exchange Traded Funds (ETFs) All investments listed are merely examples; you should conduct your own research before investing.

  13. Real Estate Investment Trusts (REITs) • Real Estate Investment Trusts (REITs) manage a portfolio of real estate to earn profits for shareholders. REITs can avoid taxation at the corporate level as long as 95% of net earnings are distributed to shareholders annually. Because REITs must distribute most of their earnings, they tend to pay high yields. Mortgage REITs loan money for mortgages to owners of real estate, or purchase existing mortgages or mortgage-backed securities. Their revenues are generated primarily by the interest that they earn on the mortgage loans.

  14. Real Estate Investment Trusts (REITs) All investments listed are merely examples; you should conduct your own research before investing.

  15. Business Development Companies (BDCs) • To qualify as a Business Development Company (BDC), a company must be registered in compliance with Section 54 of the Investment Company Act of 1940. A major difference between a BDC and a venture capital fund is that BDCs allow smaller, non-accredited investors to invest in startup companies. Some of the reasons why BDCs have become popular is that they provide permanent capital to their management, allow investments by the general public and use mezzanine financing opportunities.

  16. Business Development Companies (BDCs) All investments listed are merely examples; you should conduct your own research before investing.

  17. Master Limited Partnerships (MLPs) • A Master Limited Partnership (MLP) must derive most (~90%) of its cash flows from real estate, natural resources and commodities. The advantage of an MLP is that it combines the tax benefits of a limited partnership (the partnership does not pay taxes from the profit – the money is only taxed when unitholders receive distributions) with the liquidity of a publically traded company. 

  18. Master Limited Partnerships (MLPs) All investments listed are merely examples; you should conduct your own research before investing.

  19. References • Seeking Alpha: http://www.seekingalpha.com • Investopedia: http://www.investopedia.com • Yahoo Finance: http://finance.yahoo.com • Google Finance: http://www.google.com/finance • Security Analysis. Benjamin Graham and David Dodd.

  20. Ideas for Future Meetings and Open Forum

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